A blog about developments in the nongovernmental, nonprofit, charitable sector in China.

Sunday, November 29, 2015

More Comments on the Charity Law Draft (public comments due November 30!)

In an
earlier post on November 11 (Some
Good News Regarding the Overseas NGO Law Draft and the Long-Awaited Charity Law),
I discussed the first draft of the Charity Law which was released
for public comment at the end of October. Tomorrow (November 30) is the last
day to post comments on the draft so I thought I would provide some more thoughts on this draft.I was fortunate to be able
to attend a talk on Friday at the Chinese University of Hong Kong by Professor
Anthony Spires, who is an expert on Chinese civil society and has been
monitoring the Charity Law since it was first proposed almost 10 years ago, and
will include some of his commentary here.

In my
earlier post, I noted that the Charity Law draft, on the whole, provides a
positive, enabling environment for charitable organizations. The Overseas NGO Management Law draft, in
comparison, looks stifling and draconian. Professor Spires confirmed that
earlier drafts of the Charity Law did cover the activities of overseas
charitable organizations before a different division of labor was suddenly decided on late last year. The Charity Law would only address Chinese organizations and come
under the supervision of Civil Affairs, while activities of overseas NGOs would
be regulated by the Overseas NGO Law under the supervision of the Ministry of
Public Security.

My
earlier post examined three positive highlights of the Charity Law draft[1].Here, let me elaborate a bit more and add
some critical discussion of some of the language in this draft that I would
like to see revised.

One
highlight of the draft is that it upholds a quite expansive view of charity or
philanthropy to include the promotion of health, environmental protection and “other
activities consistent with the societal public interest”. Of course, we will
see have to see how this law is implemented, but the language here would theoretically
allow for work on HIV/AIDS, labor and legal advocacy to be considered charity.
That would be a big step in the right direction given the importance of the
term “charity” in Chinese discourse on civil society.

Second,
the draft appears to allow for the direct registration of charitable
organizations, thereby doing away with the old “dual management system” in
which NGOs had to find a professional supervising agency before they could
register with Civil Affairs. The language in the draft could be clearer on this
point, but an article
posted on the NPC’s website confirms that this is the intent. Article 9 states
that charitable organizations would also have to meet “other conditions
stipulated by law and administrative regulations” so it does it leave open the
possibility that other laws such as the Overseas NGO Law or the various
regulations for registration and management of social organizations would need
to be considered. There has also been talk about drafting a Social
Organizations Law that would address the registration and management of all
social organizations, not just charitable ones, but also trade and professional
associations, scientific associations, community organizations, among others. Given
that the Overseas NGO Law and other related regulations are currently being
drafted and revised, their impact on the Charity Law remains to be seen.

Third,
the last article in this draft law notes that “even when a non-profit
organization with the purpose of conducting charitable activities is not
registered, it can still conduct charitable activities within its limits, but
shall comply with the relevant provisions of this Law and benefit from relevant
rights and interests according to law.” As I said in my previous post, this
clause essentially says that unregistered NGOs should not be considered as
illegal and should be allowed to carry out charitable activities. That is a very
significant step forward from seeing such NGOs as illegal, and recognizes that
small, community groups or groups consisting of marginalized populations such
as sex workers may not have the capacity or desire to register but may still perform
an important societal purpose.

To these
positive highlights, Professor Spires adds a few more optimistic observations:

One is
contained in Article 24 which states that “charitable organizations can form professional
associations (hangye zuzhi). These professional organizations shall
reflect needs of the profession, promote professional, strengthen
professional self-discipline, raise the
credibility of the charity sector and promote the
development of charitable causes.” This article encourages something that used
to be discouraged which is for charitable organizations, NGOs to come together
to form networks and associations that can represent their interests and help
to develop the sector. One example that comes immediately to mind is the China
Private Foundation Forum (中国非公募基金会论坛) that was formed several years ago and meets
annually to promote discussions on developing and regulating the philanthropic
foundation sector. This type of self-regulation among charitable organizations
within the philanthropic sector is precisely the kind of regulation that the
Charity Law should be encouraging, while minimizing regulation by government
agencies.

Another
is that there is no corporatist language restricting the number of charitable
organizations or their scope of work. In past regulations, it was common to see
clauses that stated that only one social organization working on that issue
area was allowed to register within a given administrative area, or that a
social organization registered in an administrative area could only work within
that area. For example, an organization working on water pollution in Beijing
could not register if a similar organization was already registered in Beijing.
And if a water pollution organization was able to register in Beijing, it could
only legally work within the administrative borders of Beijing, even though
water pollution does not respect such borders.

Finally, Article
100 states that charitable organizations only need to submit an annual report.
Under past regulations, social organizations were required to go through an
annual review process. If they did not pass that review, then they could have
their registration annulled. Under this draft, charitable organizations only
have to submit a report to the Civil Affairs authorities; they do not need to
have that report approved by the authorities.

**************************************

While
this draft sets a good model for forthcoming legislation in the NGO sector, it
is not perfect. There are a number of areas for improvement if you want to dive
into the details. Here are a few of the major issues that stood out for me:

1) Chapter
3 of the draft addresses Charitable Fundraising and, following past practice,
separates charitable organizations into two classes: public fundraising (公募) and
non-public fundraising (非公募). The former are allowed to fundraise through
public channels such as television, radio, newspapers, setting up collection
boxes in public spaces, holding charitable performances, sales, competitions,
gala dinners, etc. The latter are only allowed to accept private gifts and
donations. Articles 25-26 in this chapter allows charitable organizations that
previously had public fundraising status to keep their privileged status, while
other organizations need to wait for a two-year period and show they operated
within the rules and have not violated the Charity Law.

This stipulation
sounds reasonable but it maintains a two-class system in which charitable
organizations with public fundraising status (most of these are GONGOs or NGOs
with government connections) are grandfathered in, while other organizations have
to prove their credentials. Yet the former are by no means deserving of that
status. In 2011, a number of scandals such as the Guo Meimeiincident rocked the philanthropic sector, and
all of them implicated public fundraising GONGOs such as the Chinese Red Cross
and the China Soong Chingling Foundation. These charitable organizations should
also have to prove their worth, and not automatically be given public
fundraising status simply because they are big, “professional” and have
government connections.

We also
should keep in mind that in the past, small, grassroots organizations doing
sensitive work can, and have been, cited by authorities for violating various
laws and regulations as a way to close these organizations down or discourage
them from continuing their work. In this context, charitable organizations that
have been cited for violating the law should not be automatically disqualified.
This draft states, to its credit, that Civil Affairs authorities will only
consider violations of this Charity Law rather than of other existing laws and
regulations, but still the authorities’ selective application of laws and
regulations to silence organizations doing more sensitive work should be kept
in mind; these organizations should be given a second chance to apply for
public fundraising status.

2) There
are also various references to the tax benefits of charitable organizations,
but these references should be made clearer in terms of which tax laws and
regulations apply since this is an area that is unclear not only to charitable
organizations but also to tax authorities. A great deal of work needs to be
done to raise awareness about, and simplify procedures, for obtaining tax
benefits for both charitable organizations and donors to those organizations.

3) There
is quite a bit of emphasis in this draft on transparency and information
disclosure, with an entire chapter (Chapter 7) devoted to this issue. While it
is understandable that charitable organizations should be accountable and
transparent, this draft goes too far in requiring charitable organizations to
report on how they use their donations. Articles 76 and 77 in particular,
require a level of reporting that would make it difficult for smaller,
grassroots organizations that lack staff to do report at this level. More
emphasis should be placed on self-discipline and self-regulation, and relying
more on professional associations and industry standards, and less on
government authorities, to regulate this area.

4)
Finally, the drafters need to be careful of using overly broad language such as
“endangering national security or the public interest” to justify
investigations of charitable organizations. Article 109, for example, states: “Where charitable organizations
engage in or fund activities that endanger national security or the public
interest, the relevant organs investigate in accordance with law, and where the
circumstances are serious, the civil affairs departments revoke registration
certificates; where a crime is constituted, pursue criminal responsibility in
accordance with law.”

***********************************

In conclusion, the Charity Law
draft is a promising piece of legislation. Too often, we see laws and
regulations issued seeking to discourage and restrict the tremendous interest
in philanthropic and public interest activities in Chinese society. With some
further revisions, this draft could set an important standard for legislation
that finally enables the development of the charitable, civil society sector in
China.

As Professor Wang Ming of
Tsinghua University said in his address earlier this month announcing the
launch of Tsinghua’s Institute of Philanthropy, we need to start thinking about
how best to develop philanthropy and civil society once this law passes. We
need to start thinking about what philanthropy and civil society in China will
look like in the post-Charity Law era.